The Keynesian Revolution

In one sense the Keynesian revolution was purely the product of one person’s mind. Others made a significant contribution, but if the mind of John Maynard Keynes had worked differently, The General Theory of Employment Interest and Money would have been a different book, or might never have been written at all. But in another, deeper sense, it was the product of the Great Depression, or rather of the crisis in economic theory produced by that Depression. The policy recommendations of the General Theory were, by the time it was published in 1936, fairly familiar (Davis, L971; Garvy, 1975; Shackle, 1967), not least because of the use that had been made of them in several countries over the previous few years (see Chapter 2). Keynes’s achievement was to bridge the gulf between these practical ideas and pure neoclassical theory; to root these thoughts in (as he conceived it) a new, general theory of economics.